Mortgage Rates Begin To Fall After Market Shock

December 10, 2022

Homeowners who are reaching the end of their current mortgage terms will be anxiously keeping an eye on mortgage rates at the moment. The same is true of those who are hoping to take their first step on the property ladder, or perhaps take out a new buy-to-let mortgage.

Spiralling inflation and rising interest rates meant that mortgage rates were already around the 4.5% mark in September, way above the low 2 or 3% rates which UK mortgage holders have benefitted from over the last decade or more.

The situation was compounded by the disastrous mini-budget in September, which caused rates to spike to around 6.6% in some cases, and high street lenders to withdraw thousands of products from the market. However, there is finally some good news on the horizon, as rates are slowly beginning to fall back to levels below 5%, The Independent reports.

This is despite the Bank of England raising interest rates to 3%, in the biggest hike of 0.75% for 40 years. Many lenders have already factored this in to their product prices, so the effect was more muted than some has predicted. Furthermore, it is now predicted that future rises will peak at 4.5%, below the previously predicted peak of 5.5%.

For anyone hoping to get on the property ladder for the first time, this is better news than they might have hoped for even a few weeks ago. This is Money reports that as house prices have started to fall, and are widely predicted to continue falling by between 5 and 10% next year, it might be a good time to start considering a first-time mortgage.

The publication comments that what has been a sellers’ market for the past few years is now rapidly transforming into a buyer’s market. There is less competition for properties, with sellers more open to negotiating on price.

This is a far cry from the previous eighteen months, when houses were regularly selling for far above the asking price, and there were often dozens of bids for each property. A less hectic market, and falling mortgage interest rates, may mean that now is the right time to act.

If you are considering buying a property at the moment, or if your current mortgage deal is coming to an end, it’s advisable to seek the assistance of an experienced mortgage broker. They will be well placed to guide you through the current complexities of the mortgage market, and help you secure a deal which is most suited to your needs.

This is particularly true if you have a situation which is slightly different from the norm, such as an adverse credit history, self-employment, or if you are seeking buy-to-let mortgage advice. A good broker will have established relationships with a comprehensive range of specialist lenders, are likely to know which ones will offer you the most competitive deal.

Your home may be repossessed if you do not keep up with your mortgage repayments.

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